Don’t Exaggerate Your Mechanic Lien Claim

Dont Exaggerate Your Mechanic Lien ClaimVincent Pallaci’s New York Construction Law Update blog called our attention to a recent New York Supreme Court case in New York, Remodeling Construction Services v. Minter.   The case presents a common circumstance for home builders.

On a residential construction project, a homeowner would pay their contractor over progress payments, with each draw being due at a certain project milestone.   The homeowner and contractor disagreed as to whether a particular milestone was met (and thus, whether a progress payment was due), and this caused the project to shut down.   Each party cried breach of contract.

In the Minter case, the New York Supreme Court confirmed a summary judgment decision that the contractor was not entitled to the progress payment, and thus terminated the contract prematurely.

What is interesting for those who follow mechanic lien laws, is that the homeowner also sued the contractor for a “willful exaggeration” of the lien claim.

The “willful exaggeration” claim is a New York term, but nearly every state allows a property owner to sue a contractor if the contractor willfully exaggerated their lien claim.   The key word here is “willfully,” as these types of claims very typically require proof that the claim was exaggerated with actual malicious intent.

As Pallaci mentions in his post, while the court in Minter determined that the contractor was not entitled to the last progress payment, it did not rule on summary judgment that the lien for this last progress payment was “willfully exaggerated.”   This doesn’t kill the homeowner’s claim, but it does highlight the distinction between liens that are incorrectly claimed, and those that are “willfully exaggerated.”

A lien claimant should always carefully file its lien claims.   Oftentimes, a claimant owed money will try to increase a claim out of anger.   It’s important to keep a cool head and make a claim for the amounts you’re entitled to only.

Dont Exaggerate Your Mechanic Lien Claim

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  • http://constructionlawva.com Christopher G. Hill

    Great advice Scott. In any event, like in many states, my state of Virginia will completely throw out an over inclusive claim.

  • http://www.zlienit.com Scott Wolfe

    Thanks for the comment Chris. It’s funny how much this changes from state to state, and how some states are even conflicted on the issue within.

    When courts are confronted with this question, there is always tension between ensuring lien claims are fairly asserted and analyzing the lien amount with the proper procedure.

    Since most actions to challenge liens are summary proceedings, it seems unfair to have a court look at these sometimes fact-heavy questions in such a proceeding. Many states (like Louisiana), will look at the procedure issues of a lien only, and leave the fact disputes to a trier of fact at trial (or at least they are supposed to).

    However, I have represented property owners or general contractors frustrated with excessive lien claims.

    How does Virginia handle this? Can you challenge a lien and get a summary trial on the dollar amount one party owes to another?

  • anonymous

    Homeowners should also know at trial of judgement for damages, not only did the defendent or should we clarify (plaintiff) Minter prove that plaintiffs/builder Robert Kirby & Kenneth DeGroff defaulted on a bank construction loan, but they also committed fraud & frivilous “exagerrated” lien to prevent NY Law from indicting them any further. Only in NY will you see this type of case 6 yrs. later still not be on the front pages of every New York newspaper as an example of how NY law does not protect you the homeowner, even if your builder signed a bank construction loan. Let’s see how the judge who is now Supreme justice of Buffalo, NY, Ferralota, accepts all receipts provided in her court as proof the costs to finish the project proved the builders Robert Kirby & Kenneth DeGroff of RCS committed fraud, theft, and a “WILLFULL Exagerrated Lien” otherwise known as a “frivilous lien” and what her judgement will be?

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